Interactive Video and Data Service (IVDS) is a point-to-multipoint,
multipoint-to-point, short-distance communication service that operates in the
218- to 218.5-MHz and 218.5- to 219-MHz frequency bands. In September 1993, the
FCC assigned the licenses for IVDS by lottery in the top 10 markets.

The following year, two licenses per market were offered for auction at the
same time, with the highest bidder given a choice between the two available
licenses, and the second highest bidder winning the remaining license. More than
95 percent of all IVDS licenses were won by small businesses or businesses owned
by members of minority groups or women. Additional auctions, ending in 1997,
were held for the available spectrum in other markets.

As envisioned, an IVDS licensee would be able to use IVDS to transmit
information and product and service offerings to its subscribers and receive
interactive responses. Potential applications included ordering goods or
services offered by television services, viewer polling, remote meter reading,
vending inventory control, and cable television theft deterrence. An IVDS
licensee was able to develop other applications without specific approval from
the FCC.

An IVDS channel, however, was insufficient for the transmission of
conventional fullmotion video. Initially, mobile operation of IVDS was not
permitted. In 1996, however, the FCC amended its rules to permit IVDS licensees
to provide mobile service to subscribers. This action authorized mobile
operation of response transmitter units (subscriber units) operated with an
effective radiated power of 100 milliwatts or less.

The FCC found that this change would increase the flexibility of IVDS
licensees to meet the communications needs of the public without increasing the
likelihood of interference with TV channel 13, which was of concern at the time.
According to the FCC’s rules at the time IVDS spectrum was awarded, licenses
cancel automatically if a licensee does not make its service available to at
least 30 percent of the population or land area within the service area within 3
years of grant of the system license.

Each IVDS system licensee had to file a progress report at the conclusion of
3- and 5-year benchmark periods to inform the FCC of the construction status of
the system. This arrangement was intended to reduce the attractiveness of
licenses to parties interested in them only as a speculative vehicle.

The spectrum for IVDS was initially allocated in 1992 to provide interactive
capabilities to television viewers. This did not occur largely because the
enabling technology was too expensive and market demand too low or nonexistent.
IVDS is now known as 218- to 219-MHz service. In September 1999, the FCC revised
its rules for the 218- to 219-MHz service to maximize the efficient and
effective use of this frequency band.

The FCC simply reclassified service from a strictly private radio service—one
that is used to support the internal communications requirements of the
licensee—to a service that can be used in both common carrier and private
operations. Licensees are now free to design any service offering that meets
market demand. In addition, licensees now have up to 10 years from the date of
the license grant to build out their service without meeting the 3- and 5-year
construction benchmarks.